Eduardo Catorga, o principal negociador do Programa da Troika em nome do PSD, vem ao fim de apenas nove meses juntar-se ao coro dos que defendem um ajustamento do Programa. Ajustar, estender, flexibilizar ou renegociar são questões semânticas sobre as quais não vale a pena perder tempo.
A verdadeira questão que deve ser colocada é sobre o que é que o Governo Português pretende fazer para resolver o problema da divida soberana. Depois sim, temos de equacionar se essas medidas podem ser tomadas no contexto do actual acordo ou se é necessário alterá-lo.
Infelizmente, o Governo parece não saber o que fazer e por isso tende a juntar-se ao coro dos que querem mais dinheiro, mais tempo para o pagar e melhores condições.
Por outro lado, malgré a Grécia, a Troika e a Alemanha estão interessadas em continuar a fingir que os programas que impuseram aos países periféricos estão a produzir resultados; quando é evidente que nem sequer cumprem os objectivos a que se propuseram, que já de si eram pouco ambiciosos. Por exemplo, Portugal não conseguiu cumprir o objectivo do défice orçamental para 2011 tendo que recorrer a operações de contabilidade criativa com os fundos de pensões da banca para encobrir essa deficiência.
Portanto, estão reunidas as condições necessárias para que em breve seja feito um ajustamento “facilitador” ao programa Português.
Infelizmente, tais “facilidades” são uma miragem enganadora que hipoteca o futuro do país. Pior, perpetuam a sua dependência das instituições internacionais; correndo-se mesmo o risco de Portugal se tornar definitivamente um antro de negócios escuros e subsidiodependência ao nível de alguns PALOPs como a Guiné, São Tomé ou Moçambique.
Na verdade, o Programa da Troika não funciona porque em vez de reduzir a divida pública se propõe aumentá-la em mais de 15%. Não funciona, porque em vez de reduzir a despesa pública improdutiva tolera o seu aumento e permite a proliferação de excepções às medidas de austeridade a todos os grupos de interesses mais favorecidos e poderosos. Não funciona, porque em vez de aumentar o trabalho aumenta os impostos. Não funciona, porque deixa intocados todos os cancros e grupos de interesses que minam a sociedade Portuguesa.
Por isso, a pergunta que se impõe não é saber se vamos ajustar o Programa da Troika mas o que é que o Governo pensa fazer para ultrapassar as suas limitações e incoerências.
Sunday, 12 February 2012
Saturday, 11 February 2012
Markets behaving badly again?
The Obama administration $25 billion deal struck with the nation’s five biggest mortgage servicers tops numerous other approaches to boosting the housing market that have conspicuously failed to prop up the economy.
However, such attempt at propping up real estate prices to the levels achieve at the height of the previous bubble is a questionable objective. First, it disregards the ability to pay of homeowners and second it risks creating a new financial bubble.
Indeed, the financial bubble seems to be already blowing if one looks at the chart below where we compare the evolution of house prices (measured by the Case-Shiller Index), with the trend in real estate investment funds (measured by the Ishares Real Estate Trust) and the stock market (measured by S&P 500 index).
The chart shows that there is again a large differential between the price of financial assets (IYR) and the price of their underlying real assets (houses). Although some lagging between real and financial assets is normal, wide deviations usually occur in bubbles or crashes. This fact is important for homeowners as well as to macroeconomic policy and monetary quantitative easing in particular.
Back in the 1930s, the debate between Keynes and Hayek on the efficacy of stimulus policies discussed the relationship between asset prices and production prices. Hayek believed that markets left to their own would restore the prices of assets without increasing those of production. In contrast, Keynes argued that piling up bank balances or purchasing existing securities to bid their prices to previous levels would cause the release of real resources (capital and labour) while failing to find new opportunities to invest them due to a lack of confidence (“animal spirits”). As it turned out the recovery only came about after a number of years through government stimulus of the worst kind (armament and war spending).
Therefore, modern Keynesians like Paul Krugman who are sceptical about the sustainability of quantitative easing should be less soft on quantitative easing and more committed to devise deficit stimulus packages that have a less costly multiplier effect. My own suggestions about the government spending multiplier can be found in this post.
However, such attempt at propping up real estate prices to the levels achieve at the height of the previous bubble is a questionable objective. First, it disregards the ability to pay of homeowners and second it risks creating a new financial bubble.
Indeed, the financial bubble seems to be already blowing if one looks at the chart below where we compare the evolution of house prices (measured by the Case-Shiller Index), with the trend in real estate investment funds (measured by the Ishares Real Estate Trust) and the stock market (measured by S&P 500 index).
The chart shows that there is again a large differential between the price of financial assets (IYR) and the price of their underlying real assets (houses). Although some lagging between real and financial assets is normal, wide deviations usually occur in bubbles or crashes. This fact is important for homeowners as well as to macroeconomic policy and monetary quantitative easing in particular.
Back in the 1930s, the debate between Keynes and Hayek on the efficacy of stimulus policies discussed the relationship between asset prices and production prices. Hayek believed that markets left to their own would restore the prices of assets without increasing those of production. In contrast, Keynes argued that piling up bank balances or purchasing existing securities to bid their prices to previous levels would cause the release of real resources (capital and labour) while failing to find new opportunities to invest them due to a lack of confidence (“animal spirits”). As it turned out the recovery only came about after a number of years through government stimulus of the worst kind (armament and war spending).
Therefore, modern Keynesians like Paul Krugman who are sceptical about the sustainability of quantitative easing should be less soft on quantitative easing and more committed to devise deficit stimulus packages that have a less costly multiplier effect. My own suggestions about the government spending multiplier can be found in this post.
Saturday, 4 February 2012
The beauty of capitalism
There is a never ending history of blaming capitalism for all evils in society. The vigilantes are always out there looking for market failures and externalities to "prove" the limitations of capitalism.
The most recent accusation is that capitalism is responsible for obesity because the food industry is driven to profit from what Ken Rogoff called coronary capitalism.
The idea that capitalism promotes vice at the expense of virtue is an historical nonsense. Otherwise, after 200 years of capitalism, western economies would now be dominated by casinos and brothels. Yet, these vice industries are still niche industries.
It is true that capitalism is affected by market failures and externalities, but these are the exception not the rule. It is also true that it may cause some unhealthy patterns in terms of consumption. But in market capitalism these imbalances are necessarily temporary; while they are bound to be perpetuated under other economic systems and government rule.
In fact the food industry provides a unique proof of this principle. As soon as the junk food became dominant and inefficient a growing number of enterprising capitalists stepped in to offer all sorts of alternatives; ranging from the organic food industry to the keep fit and health clubs without any government intervention.
Indeed if the fast-food industry still caters for so many people that is because of governmental failures rather than market failures. It is because of government failures that we have an ever growing number of families living on social security and low-cost dinners. It is because governments provide lousy school meals that children acquire unhealthy eating habits. And, it is also because of government´s inadequate funding for scientific research in food and health that we have so much voodoo science in what relates to healthy eating habits.
On the contrary, capitalism is part of the solution for these government failures. By competing to provide low income families with affordable and varied meals it facilitates the acquisition of good eating lifestyles.
That is really the beauty of market capitalism. Instead of raising regulatory barriers to protect the incumbents in the food industry competition ensures that they will be under permanent challenge. So, it corrects not only its own imbalances but also those created by either devious or well-meaning paternalistic governments.
The most recent accusation is that capitalism is responsible for obesity because the food industry is driven to profit from what Ken Rogoff called coronary capitalism.
The idea that capitalism promotes vice at the expense of virtue is an historical nonsense. Otherwise, after 200 years of capitalism, western economies would now be dominated by casinos and brothels. Yet, these vice industries are still niche industries.
It is true that capitalism is affected by market failures and externalities, but these are the exception not the rule. It is also true that it may cause some unhealthy patterns in terms of consumption. But in market capitalism these imbalances are necessarily temporary; while they are bound to be perpetuated under other economic systems and government rule.
In fact the food industry provides a unique proof of this principle. As soon as the junk food became dominant and inefficient a growing number of enterprising capitalists stepped in to offer all sorts of alternatives; ranging from the organic food industry to the keep fit and health clubs without any government intervention.
Indeed if the fast-food industry still caters for so many people that is because of governmental failures rather than market failures. It is because of government failures that we have an ever growing number of families living on social security and low-cost dinners. It is because governments provide lousy school meals that children acquire unhealthy eating habits. And, it is also because of government´s inadequate funding for scientific research in food and health that we have so much voodoo science in what relates to healthy eating habits.
On the contrary, capitalism is part of the solution for these government failures. By competing to provide low income families with affordable and varied meals it facilitates the acquisition of good eating lifestyles.
That is really the beauty of market capitalism. Instead of raising regulatory barriers to protect the incumbents in the food industry competition ensures that they will be under permanent challenge. So, it corrects not only its own imbalances but also those created by either devious or well-meaning paternalistic governments.
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